NZ market rises to five year high

5:30 AM Friday Dec 21, 2012

Mainfreight rose about 4 per cent to a record close of $11.75. Photo / Sarah Ivey

New Zealand shares rose to a new five-year high yesterday as foreign investors were drawn to the nation's relatively attractive returns and cheered the expansion plans of companies such as SkyCity Entertainment Group.

Mainfreight and Diligent Board Members Services hit new records.

The NZX 50 Index rose 52.45 points, or 1.3 per cent, to 4075.45, the highest close since December 2007.

Within the index, 33 stocks rose, eight fell and nine were unchanged.

Turnover was a higher-than-average $166 million, surprising traders who were expecting a pre-Christmas wind-down.

SkyCity rose 1.3 per cent to $3.84, extending its gains of Wednesday when it announced it had reached agreement with the South Australia state government on the expansion of its Adelaide casino. Separately yesterday SkyCity said it sold its half-share of Christchurch casino and had taken full ownership of Queenstown's gaming centre.

The SkyCity announcement on Adelaide "has been very well received", said David Price, a broker at Forsyth Barr. The Adelaide expansion added about 25c to the stock's valuation, he said.

Offshore investors were drawn to double-digit returns on New Zealand stocks, Price said. "There's a lot of fresh money coming into the market."

Diligent, which has soared 159 per cent this year, rose 5.8 per cent to $5.30, leading the NZX 50 higher.

Xero fell 1.3 per cent to $7.60.

The two tech companies have been the star performers on the bourse this year, with Xero climbing 179 per cent.

That's prompted some key investors to trim their holdings, including Trade Me founder Sam Morgan, who has reduced his stake below 5 per cent.

Trade Me declined 1.3 per cent to $3.94. Australia's Fairfax Media sold its 51 per cent stake this week.

Mainfreight, the logistics and transport group, rose about 4 per cent to a record close of $11.75. The stock is rated "outperform" based on six analyst recommendations compiled by Reuters.

Fletcher Building rose 2.2 per cent to $8.45.

Telecom rose 1.3 per cent to $2.32. Chorus rose 4.4 per cent to $2.84, recovering some of the ground lost last week when the regulator gave a draft view on network price controls. Contact Energy rose 3.1 per cent to $5.34.

Rakon dropped 9.8 per cent to 37c. The company cut its full-year earnings guidance because of sales delays and thinner margins.

Smiths City Group rose 3.7 per cent to 56c after posting a 2.6 per cent gain in first-half profit and saying retail conditions are difficult, especially for consumer electronics. It kept its first-half dividend unchanged at 1c a share.

Veritas Investments, the shell company listed on the NZX after Salvus Strategic Investments was wound up, jumped 17 per cent to 7c after announcing it had agreed to buy the Mad Butcher franchisor business in a $40 million cash and scrip deal, and will seek more funding.